A Philadelphia councilman wants Philadelphia Gas Works (PGW), which is the nation’s largest municipally owned natural gas utility, to use natural gas produced in the Marcellus Shale instead of Gulf of Mexico (GOM) gas received via pipeline.

In an interview with WHYY, James Kenney (D-At Large) said the utility needs to change its mindset and become a profitable operation.

“There are a lot of handcuffs and shackles that PGW has on it when it comes to co-venturing with private firms,” Kenney said Thursday. “In the era of Marcellus Shale and Philadelphia Energy Solutions coming in to Sunoco…I think we need to get PGW as nimble and as able to pivot as possible.”

Philadelphia Energy Solutions, a joint venture (JV) between Carlyle Group LC and Sunoco Inc., now runs Sunoco’s Philadelphia refinery, which had been scheduled to close in August (see Shale Daily, July 3). The JV plans to eventually send, by rail from North Dakota, up to 140,000 b/d of Bakken crude for processing at the 146-year old facility. Marcellus Shale gas will be used for processing operations.

Kenney said he would love to get PGW “to the point where we’re actually a profit center and we’re a viable partner with private-sector companies. It provides opportunities for folks in the city to expand [their] employment base and other things. Marcellus Shale, despite the beating that it’s taking in many sectors, is truly an opportunity for the state and for the city to move forward economically and environmentally.

“At some point in time I’d like to see if we can get [natural gas] piped here or trucked here. It is a cheap and pretty clean form of energy that we could use in a city that has a large amount of people living in poverty and can’t afford their gas bills. If we can put people to work, provide cheap home heating and create jobs, I think [that] should be explored.”

But PGW spokesman Barry O’Sullivan warned that it would be difficult for the utility to use Marcellus Shale gas.

“We buy gas from companies not geographies,” O’Sullivan said according to a report by StateImpact Pennsylvania. “Right now most of our gas comes from the [GOM] because it is more cost effective, more reliable…and it can actually reach here easily. No pipeline from Marcellus Shale sources currently serves Philadelphia directly.”

An anti-Marcellus tone also exists among some Philadelphia officials. During his opening remarks at last month’s Shale Gas Insight 2012 Conference, Mayor Michael Nutter rolled out the welcome mat but also criticized the oil and gas industry for not building public trust in its practices (see Shale Daily, Sept. 25). The city council also supported joining a lawsuit against the Delaware River Basin Commission over Marcellus Shale development, but Nutter intervened (see Shale Daily, Oct. 26, 2011; Oct. 20, 2011).

In January 2011, the city council passed a resolution barring the PGW from purchasing Marcellus Shale gas until the U.S. Environmental Protection Agency has completed a study on hydraulic fracturing (see Shale Daily, Jan. 20, 2011).

At that time, the utility was spending about $350 million a year to supply the city with natural gas. In an interview, Marcellus Shale Coalition President Kathryn Klaber said the utility had signed long-term contracts to receive GOM gas through the Transcontinental Gas Pipe Line (Transco).

O’Sullivan could not be reached for comment Monday.

“Five to seven years from now, [PGW could provide] extremely inexpensive home heating gas for elderly and poor people, [and] opportunities for young people to go into engineering and other sciences that are related to the field of gas exploration and natural gas distribution,” Kenney said. “There are so many opportunities out there with this industry. Philadelphia should not be trying to isolate itself from it.”